Singapore REITs Monthly – DPU growth expected in 1H26 July 24, 2026 7

  • The S-REITs Index edged up 0.4% in June, following a 1.6% decline in May. CapitaLand Integrated Commercial Trust (CICT SP, non-rated) was the best performer, rising 4.4%, while IREIT Global (IREIT SP, non-rated) was the worst performer, declining 12.8% following an update on the ongoing DRV litigation, which progressed to formal court proceedings, with DRV seeking repayment of €8.4mn plus interest. The Singapore diversified REIT sub-sector was the best performer for the month, gaining 3%, while the overseas commercial REIT sub-sector was the weakest, declining 6.5%.
  • For the 2Q26 earnings preview, we expect S-REITs to report c.3% YoY DPU growth on average, driven by stronger NPI from higher rents and lower financing costs amid a lower interest rate environment than a year ago. Retail, office, and industrial REITs are expected to continue delivering mid- to high-single-digit rental reversions, while hospitality REITs are likely to see softer operating performance due to higher airfares and travel disruptions stemming from the Middle East conflict.
  • We maintain OVERWEIGHT on S-REITs, though we remain selective given the current interest rate backdrop. Our preference is for REITs with robust balance sheets, defensive earnings profiles, and a higher proportion of fixed-rate debt to limit exposure to interest rate volatility. Within the sector, we continue to favour retail S-REITs, supported by healthy tenant sales and limited new supply, which should underpin mid- to high-single-digit rental reversions in 2026. Our top picks are high-yielding REITs with resilient portfolios: Stoneweg Europe Stapled Trust (SERT SP, BUY, TP: €1.89), Elite UK REIT (ELITE SP, BUY, TP: £0.41), and United Hampshire US REIT (UHU SP, BUY, TP: US$0.69). We also like Prime US REIT (PRIME SP, BUY, TP: US$0.32) on valuation grounds. At 0.3x P/NAV, it offers an attractive entry point with improving cash flow visibility and DPU growth potential.

 

Sector round-up
The average cost of debt for S-REITs declined by c.40bps YoY as at end-March 2026. We expect
a further c.10bps decline over the rest of the year, supported by refinancing at lower SGD
benchmark rates, particularly for REITs with larger SGD-denominated debt profiles. While the
3-month SORA has stabilised at around 1.1%, it remains c.100bps below levels a year ago,
continuing to support lower financing costs. However, overseas interest rates have started to
edge higher amid expectations of renewed inflationary pressures from the ongoing Middle
East conflict. The RBA, ECB, and BOJ have all raised policy rates this year, and we expect
borrowing costs for foreign currency-denominated debt to gradually increase, although the
impact should be cushioned by existing interest rate hedges.

SG-JB RTS Study: Implications for Singapore Retail
A study by the Singapore Business Federation, Restaurant Association of Singapore, and
Singapore Retailers Association estimated that the SG-JB RTS could generate S$756mn of
incremental annual spending from JB visitors to Singapore, while Singapore consumer
spending in JB could increase by S$1.05bn annually. This translates to a net incremental
outbound spend of S$290mn, or just 0.4% of Singapore’s 2025 retail and F&B sales. The study
expects higher outbound trips by Singapore consumers, primarily for value-driven categories
such as groceries, drugstores, dining, and beauty services, while inbound JB visitors are
expected to drive demand for premium retail, entertainment, and lifestyle experiences in
Singapore.

We believe the impact of the RTS on Singapore retail REITs will be manageable, as the potential
retail leakage to JB remains relatively small compared with the overall retail market size. While
value-oriented retail categories may face some pressure from increased cross-border
spending, most retail REITs are anchored by necessity spending, F&B, services, and experiential
offerings, which are less substitutable. Furthermore, the RTS could create new opportunities
for Singapore malls by expanding the catchment area and attracting more visitors from Johor,
particularly for premium retail, dining, and entertainment concepts.
Over time, we expect retail landlords to further enhance their tenant mix and reposition malls
towards more experiential concepts, lifestyle offerings, and differentiated experiences to
capture both local and cross-border demand. With Singapore retail landlords continuing to
adapt their concepts and optimise tenant mixes, we believe the RTS is unlikely to be a material
headwind for retail REITs and could potentially provide incremental footfall opportunities for
well-positioned malls.

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About the author

Profile photo of Darren Chan

Darren Chan
Research Analyst
PSR

Darren has over three years of experience on the buy-side as a fund manager. During his time as fund manager, he has managed multiple funds and mandates including dividend income, growth, customised, Singapore focused and regionally focused funds. He graduated from the University of London with a First-Class Honours degree in Banking and Finance.

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